Financial Daily from THE HINDU group of publications
Saturday, May 06, 2006
Financial Daily from THE HINDU group of publications Saturday, May 06, 2006 |
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Money & Banking
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Financial Performance Corporate Results - Public Sector Banks Vijaya Bank posts Rs 35-cr net loss due to provisioning Our Bureau
Merger pangs: Mr Prakash P Mallya (right), CMD, Vijaya Bank, and Mr Padmanabha Shetty, Officers' Director, at a press conference in Bangalore on Friday. - G. R. N. Somashekar
Bangalore , May 5 Vijaya Bank has reported a 67 per cent drop in net profit for the financial year ended March 2006 due to higher provisioning and depreciation. Briefing reporters on the results after the board meeting the Vijaya Bank Chairman and Managing Director, Mr Prakash Mallya, said net profit for fiscal 2006was Rs 126.88 crore as against the previous year's figure of Rs 380.57 crore. During the period, the Vijaya Bank's provisions for non-performing assets and depreciation of investments was Rs 538.77 crore (Rs 416.21 crore). Mr Mallya said, "The increased provisions were on account of the merger of its housing finance subsidiary with the bank." Besides, the bank had also raised provisions for standard assets as prescribed by the RBI. The high provisioning has resulted in the bank reporting a net loss for the fourth quarter of the last financial year of Rs 34.53 crore as opposed to Rs 155.92 crore net profit during the same quarter of the previous year.
For fiscal 2006, the bank's operating profit shrank to Rs 718.23 crore (Rs 799.80 crore). The fall in the operating profit was largely on account of the drop in net interest margins to 3.20 per cent from 3.56 per cent the previous year. The bank's gross income was Rs 2,680.79 crore (Rs 2,447.98 crore). Interest on advances was Rs 1,342.41 crore, up from the previous year's figure of Rs 1,146.99 crore. The other factor which proved a drag on the bank's profit was the reduced earnings from treasury operations. Other income that also included profit from treasury operations was Rs 368.99 crore. Gross expenditure during the period was Rs 1,962.56 crore (Rs 1,658.95 crore). Interest expenditure rose to Rs 1339.02 crore (Rs 1109.77 crore). Besides, increased interest what also contributed to the rise in expenses was operating expenditure that rose to Rs 623.54 crore (Rs 549.18 crore).
To raise capital
Vijaya Bank, Mr Mallya said, intended to raise additional capital through issue of either a hybrid or subordinated debt during the year of at least Rs 250 crore to beef up its capital to risk weighted asset ratio (CRAR). For the last financial year, the CRAR was 12.23 per cent. However, after the dividend of Rs 1 per share, the CRAR would drop to 11.94 per cent he said. The bank will therefore need additional capital for sustaining its business, he added. For the current financial year, Vijaya Bank was targeting a business growth of Rs 60,000 crore comprising Rs 36,000 crore of deposits, he added. Moreover, he said the bank also planned to step up recovery efforts.
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